If there’s a common thread for companies operating during the pandemic, it’s uncertainty.
“It’s just caused massive uncertainty for all stakeholders,” says Jim Geuther, market president for Northern Ohio at SunTrust (which has merged with BB&T to form Truist). “Whether it’s clients, employees, suppliers, investors, that’s absolutely a consistent theme.”
That uncertainty is made worse because there’s no clarity on the timeline for recovery. That’s left many businesses thinking only about survival — preserving liquidity and shoring up their balance sheets — just to try to get to the other side of the pandemic.
And with new information coming out daily, it’s a dynamic challenge for management teams.
“There’s definitely a premium on businesses that can adapt,” Geuther says.
Geuther spoke with the Smart Business Dealmakers Podcast about the importance of adaptability in a time of disruption and uncertainty.
Know your company
Owners and operators right now need to evaluate their options on how to proceed during the disruptions. That could mean maintaining the status quo, growing through acquisition or pursuing a minority or majority sale.
“There are prioritization and planning opportunities with each strategy,” Geuther says. “This COVID may pivot and change some of those, but I think, at a minimum, business owners should know their company’s debt capacity and use this information to provide clarity on the ability to recap the balance sheet, take a dividend, execute an acquisition."
Geuther says there will be winners and losers that emerge from this pandemic. Owners and operators who know their financing options will be better prepared for opportunistic acquisitions of business and talent, and more likely to survive.
He says that regardless of the current situation in the market, all businesses will eventually transition their management within their family ownership structure or to an outsider. That means owners will have many planning and structural considerations to address long before that transition occurs.
“So, the sooner businesses begin this process, the better,” Geuther says. “There are just so many complexities involved in a transition.”
Owners should work with transition advisers to help them think through and plan for all aspects of a transition. That means considering themselves, their family, the team and, in some cases, the community, because they’re all interrelated stakeholders.
Preparing for the transition is made easier by working with a credible adviser who grounds any recommendation and investment strategy on a plan based on long-term goals and objectives.
“As a business owner, particularly with those that are impacted, there may be some unknowns facing you,” he says. “Trying to figure out how to maintain financial and investment flexibility, particularly if a company requires a quick injection of capital or liquidity, would be very prudent.”